Supporting Early Stage Social-Enterprises in India

Social enterprises are on the rise in the Global South and India is one of the countries leading the way. Paroma Bhattacharya, Knowledge Management Consultant at UnLtd India and department alumni, tells us what her organisation looks for when investing in an enterprise hoping to have a positive impact in the world.

In recent times, there has been a rise in the number of social entrepreneurs and social innovators across the world, with increasing attention being placed on the concept of social entrepreneurship, which aims to create innovative solutions for the world’s most pressing social problems (Alvord et al, 2004). While this has largely been a global phenomenon, the Global South has emerged as a hub for social innovation, with a large number of social enterprises either originating from or focusing on these regions. India, in particular, is an exciting country to explore with reference to social entrepreneurship, because currently, there are approximately 2 million social enterprises in India (British Council, 2016).

It is interesting to note that 57% of these ventures are under 5 years old, placing them in the early stage category, pointing to a dynamic startup social enterprise landscape in India (British Council, 2016). A thriving startup environment has, in turn, given rise to an active and vibrant Indian social innovation ecosystem, comprising of several social enterprise support players such as incubators, accelerators, donors, impact investors, corporations, academic institutions, forums, networks, online platforms, co-working spaces and industry associations (British Council, 2016). However, when it comes to social ventures operating at the startup stage specifically, there is one key actor in the Indian social innovation ecosystem that plays an important role in supporting early stage social entrepreneurs in the country – UnLtd India, a leading incubator, founded in 2007, that has been the launchpad for 130+ startup social entrepreneurs across India.

Early stage social ventures in India are incredibly diverse, in terms of sector focus, business model/structure, social entrepreneur profile/background and startup stage. This entrepreneur and enterprise diversity goes hand in hand with the fact that there are varied definitions, across the academic and practitioner world, of what qualifies as social entrepreneurship. While various ecosystem players subscribe to different notions of social entrepreneurship and often have a niche focus area in terms of the type of social ventures they can support, UnLtd India has a very inclusive and clear philosophy of the kind of individuals it works with. UnLtd India is agnostic in its approach towards sectors, organizational models and/or entrepreneur profiles, ie. it supports individuals who work across various impact sectors, run for-profit, non-profit or hybrid model organizations, and come from diverse geographical (urban or rural) and personal/professional backgrounds (students, development workers, corporate professionals, community based individuals, retired individuals, etc.). However, alongside this inclusive approach, UnLtd India also has a clear selection criteria and philosophy, namely, it’s ‘4 I’s’ – Individual, Idea, Impact, Incubation.

What do social enterprise support organizations like UnLtd India look for?

The first ‘I’, Individual, represents the fact that UnLtd India is an entrepreneur-centric organization, and it places significant importance on the founder of the social venture, ie. the social entrepreneur. While the incubator supports entrepreneurs from all personal and professional backgrounds, it specifically looks for individuals who have an entrepreneurial capability, approach and mindset with regards to solving social problems, as well as, a strong and unwavering focus on creating sustainable social impact through their organizations.

The second ‘I’, Idea, represents the need to support individuals who run social ventures that have focused solutions to specific social problems, addressing specific unmet needs or under-served segments of society. While UnLtd India supports non-profit, for-profit as well as hybrid organizational models, it subscribes to the school of thought that the idea/organization should create sustainable social impact through socially entrepreneurial activities; separate from social service or social activism activities (Martin & Osberg, 2007;Dacin et al, 2010). Further, the design of these socially entrepreneurial solutions should be backed by research and data that demonstrates that the proposed solution actually fits the specific problem being addressed.

The third ‘I’, Impact, refers to the criteria that the social entrepreneur must be committed to creating long-term sustainable change. While UnLtd India supports individuals working across all impact sectors, it looks for social entrepreneurs who are more committed to solving a specific social problem rather than delivering a particular solution, and who are willing to adjust their idea and approach, in order to serve the unmet need in the best possible way. The individuals must envision the long term impact of their solutions and must be committed to creating impact not just in terms of outputs delivered, but rather, in terms of deeper impact outcomes achieved; in other words, a long term organizationalTheory of Change. This long term planning is critical to ensure that the idea is not a short term project, but rather a holistic solution that will make a difference in the long run. Hence, UnLtd India carefully looks for individuals and ideas that have the drive, commitment and potential to truly create long lasting systemic change, either within a specific community or at scale.

Finally, the fourth ‘I’ stands for Incubation and represents the fact that UnLtd India is specifically focused on supporting individuals who are truly in need of financial and non financial support, ie. social entrepreneurs who are in the early stages of their entrepreneurial journeys. Here, ‘early stage’ refers an idea/organization that has been operating for 0-5 years. While several ecosystem players are willing to support social enterprises that are entering the scale stage, it is critical to support ventures in the risky startup stage, in order to ensure the survival and longevity of the organizations, and in turn, enable them to achieve success, impact and scale. Thus, UnLtd India looks for individuals who are in this startup stage and are eager to make the most of, and, who will also benefit the most from UnLtd India’s Incubation Programme. Hence, by living by it’s unique 4 I’s philosophy, UnLtd India has made a mark in the Indian social innovation ecosystem as a leading incubator working exclusively with startup social entrepreneurs. On a broader level, the 4 I’s can also be considered a useful framework that can help early stage social entrepreneurs understand startup support selection criteria from the lens of funders, incubators and other ecosystem support organizations.

How can ecosystem players like UnLtd India support early stage social entrepreneurs in India?

A recent report by British Council, on the state of social entrepreneurship in India, has identified the key barriers to growth and sustainability that social ventures in India are faced with today. When examining the report findings, it is interesting to note that the top 10 barriers to growth that have emerged, are directly related to the shortage of three types of critical capital that an enterprise needs in order to succeed; namely, financial capital, human capital and social capital. The biggest pain point for startup ventures is usually financial capital, and early stage impact organizations in India seem to be struggling with attracting funding (either in the form of debt/equity for for-profit ventures or in the form of grant funding for non-profit organizations) as well as, maintaining healthy cash flows (British Council, 2016).

The next critical barrier to growth is a lack of human capital available for startup social ventures, and these organizations are faced with problems such as a shortage of appropriate managerial skills and technical skills, as well as, a difficulty in recruiting staff and specifically, finding and retaining junior to mid level talent (British Council, 2016). Finally, the third key barrier, related to a lack of social capital, further exacerbates the difficult situation of early stage social enterprises in India. These organizations have a lack of access to technical support and advisory services, and are also highly disadvantaged due to a lack of awareness and understanding about social entrepreneurship among key ecosystem players and support organizations, as well as, among the public at large (British Council, 2016).

In order to catalyze the success of startup social ventures in India, social enterprise support organizations must truly understand the key barriers to growth that these organizations face and should aim to bridge these gaps by providing startup support that directly relieves these acute pain points. Organizations such as UnLtd India strive to do just that.

UnLtd India’s Incubation Programme provides a unique combination of financial and non financial support in the form of fellowships, to early stage social entrepreneurs in India. These fellowships aim to directly support the entrepreneurs with the three most important resources that a social venture needs in the startup stage, ie. funding, capacity building and access to networks. UnLtd India further tailors its offering of financial and non financial support, to fit the startup stage that the social venture is operating in, with customized fellowships for entrepreneurs at the ‘Test’ (idea/concept stage), ‘Build’ (pilot/post pilot stage) and ‘Growth Challenge’ (early scale stage) levels.

First, addressing the startup need for and dependence on financial capital (Yunus, et al, 2010), the fellowship provides a small amount of seed funding to the entrepreneurs, to help the startup social ventures get their activities up and running. While a range of funders and donors exist in the Indian social innovation ecosystem, only a few funders are open to funding the seemingly unattractive costs relating to starting up, ie. administrative and overhead expenses. However, without access to funding for these basic yet critical expenses, social startups struggle to get their operations off the ground. In order to bridge this gap, the UnLtd India fellowship allows startup social entrepreneurs to use its seed funding to finance basic important building blocks such as renting an office space, getting the organization legally registered, hiring the first team member, building a website, etc. Further, the disbursal of the funding amounts is tied to mutually agreed organizational milestones, and hence, the funding also strategically helps the entrepreneurs progress in the right direction with their startup social ventures. And one may wonder, where does UnLtd India get its funding from? Legally registered as a foundation, UnLtd India is funded by like-minded corporations and foundations, and is a noteworthy example of a successful non-profit social venture operating at scale.

Second, addressing the critical role that human capital development plays in venture performance (Kleynhans & Labuschagne, 2012), the UnLtd India fellowship provides hands-on customized capacity building to the startup social entrepreneurs in the domains of Organizational Development and Leadership Development. Through one-on-one coaching as well as group trainings and workshops on topics ranging from business planning and marketing to strategy building and interpersonal relationships, UnLtd India works with startup entrepreneurs and founding teams to catalyze the holistic development of both the social entrepreneur, as well as, the social enterprise. The capacity building on the organizational development front ensures that the startup venture achieves all necessary organizational milestones needed in order to establish itself as a successful and sustainable organization in the long run. This is complemented by capacity building in the leadership development domain, which equips the startup social entrepreneurs to grow as founders and leaders, and in turn, empowers them to attract and retain second and third line talent, which is critical to the growth of the organizations.

Finally, addressing the importance of social capital, UnLtd India also provides startup social entrepreneurs with access to high value networks of peers, experts, mentors, funders and service providers. While mobilizing ideas and resources to create sustainable societal transformations, social entrepreneurs must capitalize on the environments in which they operate, and taking insights from the field of ecology, they must collaborate with and tap into the potential of the multiple actors that co-exist in their ‘ecosystem’ (Alvord et al, 2004; Bloom & Dees, 2008). The importance of collaborating with ecosystem players is further justified by the fact that there is still a lack of understanding and awareness about social entrepreneurship in India (British Council, 2016), and the information gap must be bridged by proactively seeking out new partnerships and collaborations in order to co-create sustainable solutions to India’s social problems. Hence, by empowering startup social entrepreneurs to engage with a high value network of key actors and stakeholders, UnLtd India is playing an important part in nurturing the growth and development of the social innovation ecosystem in India.

What is the tangible social impact that is created by supporting early stage social entrepreneurs in India?

The mission of social enterprise support players is to catalyze the development of impact organizations and hence, their success lies in the success of the startup social ventures. Given this intertwined fate, ecosystem players like UnLtd India can see the tangible impact that their work has created through the impact achievements of their portfolio organizations. Out of the 130+ startup social entrepreneurs that UnLtd India has supported since 2007, it has been the first funder for 70% of these entrepreneurs; thus, playing a critical role in laying the foundation for the growth of early stage social enterprises in India. 49% of UnLtd India’s social entrepreneur fellows are female founders, pointing to a valuable contribution made to the domain of female leadership and entrepreneurship, which is a particularly relevant issue in a dominantly patriarchal society like India. UnLtd India’s social entrepreneur fellows work across various impact sectors, directly contributing to the focus areas of the UN Sustainable Development Goals, with the most number of startup ventures emerging from sectors such as Education, Livelihoods, Health, Environment and Gender Equality. The 130+ social entrepreneurs that have been supported by UnLtd India have, in turn, collectively impacted 2.4 million beneficiaries, created 3.9 lakhs jobs and raised INR 273 Crore in funding for impact focused activities. These impressive statistics highlight the important contributions made and tangible social impact created, by UnLtd India’s social entrepreneur fellows, in Indian society.

Looking beyond quantitative impact, these entrepreneurs have also brought about several invaluable qualitative changes to underserved communities across India. Some of these inspiring stories of change include Avanti Fellows empowering disadvantaged students to excel in competitive examinations and giving them access to high-quality higher education, Under The Mango Tree training tribal farmers in beekeeping leading to the economic and agricultural prosperity of several tribal villages in India, Greenway Appliances improving the health of low income consumers and also positively impacting the environment through its affordable and eco-friendly clean cookstoves, and Ruas empowering traditional rural women artisans by bringing their craft to urban artists and art enthusiasts through a unique process of artisan-artist co-creation.

These inspiring stories of change are testament to the fact that startup social entrepreneurs can create invaluable social impact, in India and across the world, with the help of the right resources, partners and supporters. A conducive social innovation ecosystem is critical to the growth and success of social entrepreneurship in India and ecosystem players, across the public, private and social sectors, must strive to collaborate with each other, in order to bridge gaps and provide opportunities for early stage social entrepreneurs. There is a great need for multi-actor partnerships that address the financial, human and social capital needs of social startups.

In particular, the social innovation ecosystem in India must create more funding sources that ease the pressure of critical startup costs, must support early stage social ventures in attracting and retaining talent by providing funding and capacity building for human capital development, and must create cross-sectoral networks and platforms to increase the awareness, understanding and support available for early stage social entrepreneurs in India. It is through a shared vision and collective impact initiatives that social entrepreneurs, and the social innovation ecosystem as whole, can truly achieve sustainable systemic change in India.

Paroma Bhattacharya is a Knowledge Management Consultant at UnLtd India. She joined UnLtd India in 2013 and has taken on several roles in the organization, such as Associate and Senior Associate in the Incubation and Knowledge teams. Paroma has a B.A. in English Literature from St. Xavier’s College, Mumbai and a Master’s (M.Sc.) in International Development Management from the London School of Economics and Political Science. She has been a Visiting Faculty Professor at the Indian School of Design and Innovation Parsons Mumbai, where she taught a course on ‘Design for Social Impact’ to undergraduate design students. She has worked on social innovation consultancy projects with PwC UK, IBM UK and Practical Action Sri Lanka. She has also worked with AIESEC, an international NGO, for 5 years, during which she spent a year in Denmark as National Vice President of Talent Programmes of AIESEC Denmark.

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